Fraud Risk Assessment Template – Free PDF

Fraud risk assessment template

Our fraud risk assessment template enables you to identify, assess, and document fraud risks across financial transactions, procurement, payroll, and other high-risk areas. It’s a systematic tool for spotting red flags and recording mitigation actions with clear audit trails.

According to the Association of Certified Fraud Examiners (ACFE), over half of fraud cases are linked to inadequate internal controls, which is why proactive assessment is essential. This template is tailored to address the specific fraud scenarios and internal control challenges facing your organization. For broader risk management, you can also browse through our business risk assessment or vendor risk assessment templates.

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Preview of the template

Assessment

Is ongoing anti-fraud training provided to all employees of the organization?

Do employees understand what constitutes fraud?

Have the costs of fraud to the company and everyone in it — including lost profits, adverse publicity, job loss and decreased morale and productivity — been made clear to employees?

Do employees know where to seek advice when faced with uncertain ethical decisions, and do they believe that they can speak freely?

Has a policy of zero-tolerance for fraud been communicated to employees through words and actions?

Is an effective fraud reporting mechanism in place?

Have employees been taught how to communicate concerns about known or potential wrongdoing?

Is there an anonymous reporting channel available to employees, such as a third-party hotline?

Do employees trust that they can report suspicious activity anonymously and/or confidentially and without fear of reprisal?

Has it been made clear to employees that reports of suspicious activity will be promptly and thoroughly evaluated?

Do reporting policies and mechanisms extend to vendors, customers, and other outside parties?

To increase employees’ perception of detection, are the following proactive measures taken and publicized to employees?

Is possible fraudulent conduct aggressively sought out, rather than dealt with passively?

Does the organization send the message that it actively seeks out fraudulent conduct through fraud assessment questioning by auditors?

Are surprise fraud audits performed in addition to regularly scheduled audits?

Is continuous auditing software used to detect fraud and, if so, has the use of such software been made known throughout the organization?

Is the management climate/tone at the top one of honesty and integrity?

Are employees surveyed to determine the extent to which they believe management acts with honesty and integrity?

Are performance goals realistic?

Have fraud prevention goals been incorporated into the performance measures against which managers are evaluated and which are used to determine performance-related compensation?

Has the organization established, implemented, and tested a process for oversight of fraud risks by the board of directors or others charged with governance (e.g., the audit committee)?

Are fraud risk assessments performed to proactively identify and mitigate the company’s vulnerabilities to internal and external fraud?

Are strong anti-fraud controls in place and operating effectively, including the following?

Proper separation of duties

Use of authorizations

Physical safeguards

Job rotations

Mandatory vacations

Does the internal audit department, if one exists, have adequate resources and authority to operate effectively and without undue influence from senior management?

Does the hiring policy include the following (where permitted by law)?

Past employment verification

Criminal and civil background checks

Credit checks

Drug screening

Education verification

References check

Are employee support programs in place to assist employees struggling with addictions, mental/ emotional health, family or financial problems?

Is an open-door policy in place that allows employees to speak freely about pressures, providing management the opportunity to alleviate such pressures before they become acute?

Are anonymous surveys conducted to assess employee morale?

Completion

Name of Risk Manager or Compliance Manager

Signature

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Frequently asked questions

What are the most common fraud risks businesses face today?

Businesses most often face fraud risks in areas like procurement, payroll, financial reporting, and cyber transactions. Common risks include invoice fraud, payroll manipulation, asset misappropriation, expense reimbursement schemes, and phishing or business email compromise.

How can a company identify red flags for potential fraud?

Red flags include unusual transactions, missing documentation, unexplained adjustments, employee lifestyle changes, and pressure to override controls. Reviewing patterns and conducting regular audits helps uncover these early warning signs, enabling you to intervene before significant losses occur.

What steps are involved in performing a fraud risk assessment?

Steps include identifying risk areas, mapping out existing controls, assessing likelihood and impact, evaluating control effectiveness, and documenting findings. You should then assign responsibilities for remediation and monitor progress on mitigation actions.

Where do fraud risks most often go undetected in organizations?

Fraud risks often go undetected in decentralized or fast-growing business units, areas with manual processes, and roles where one person controls multiple steps without oversight. Weak segregation of duties and poor documentation can make these risks harder to spot.

This template, developed by Lumiform employees, serves as a starting point for businesses using the Lumiform platform and is intended as a hypothetical example only. It does not replace professional advice. Companies should consult qualified professionals to assess the suitability and legality of using this template in their specific workplace or jurisdiction. Lumiform is not liable for any errors or omissions in this template or for any actions taken based on its content.